Case Study 3 – Jack and Diane, both aged 70, contribute a summer home to increase their income and pay less tax using charity

Jack and Diane received a brochure from their favorite charity offering them a Charitable Gift Annuity.   After consulting with their advisor, they decided to gift a non-cash asset to their favorite charity using a Gift Annuity.   The asset is a summer home purchased 25 years ago for $100,000, that is appraised at $350,000 today.   Since they no longer use the summer home and were thinking of selling it anyway, the simple solution from the advisor made the most sense.

Jack and Diane’s planning resulted in:

  1. Jack and Diane receive a fixed endowment income that they can rely on for both of their lives.
  2. Jack and Diane will pay less tax because they will receive a current income tax deduction, and they avoided a capital gains tax that would have occurred on the sale of their summer home.
  3. At the end of both of their lives, they will have endowed their favorite charity.